HP's Rebound: When Will Distractions End?

Hewlett-Packard's board needs to get out of the way of the management team and employees who are trying to turn the company around. If only we could hope for an end to the distractions.

Ray Lane stepped down as board chairman on Thursday after narrowly avoiding getting kicked off the board in a proxy battle two weeks ago. It was really the only decision he could have made after more than 40% of HP shareholders gave him a vote of no confidence.

HP's board has a long history of getting in HP's way. There was the spying scandal of 2006 that led to Patricia Dunn's resignation. There was the board's 2010 ouster of CEO Mark Hurd, which, warranted or not, was not handled well. There was the brief and troubled tenure of Leo Apotheker, who made on-again, off-again decisions about webOS mobile phone and tablet plans, speculated too publicly about spinning out the PC business, and led the ultimately disastrous acquisition of Autonomy. Lane's support for the Autonomy deal proved to be his undoing.

It's impossible to consider HP's good news when these distractions keep getting in the way. Just as HP was announcing in January a significant customer win with NASCAR using its Autonomy software, for example, rumors surfaced that the company was looking to sell both Autonomy and EDS as part of its ongoing restructuring. The proxy fight at the annual meeting in March completely overshadowed the good news that a return to fiscal stability enabled the company to increase its dividend payments by 10%.

On Thursday, I was set to take a briefing with a top HP CRM executive to hear all about HP's big data and customer-experience strategy, but news of Lane's resignation broke minutes before that call was to begin. Once again, HP board news overshadows the company's strategy for helping customers.

Lane said in a statement that he resigned "to reduce any distraction from HP’s ongoing turnaround." But we're now on track for more news that has nothing to do with what HP can do for its customers. There will be the board search for the new chairman, undoubtedly with names floated as trial balloons, stories about who was and wasn't considered and, finally, the details and follow-on stories about the final selection. Are they or aren't they protégés of Ralph Whitworth, the activist board member now serving as interim chairman?

In a separate and distracting legal matter, HP slipped in another announcement on Thursday under the Lane-resignation radar; Jury selection and opening arguments are to begin next week in the case of Hewlett-Packard vs. Oracle. This is the next stage of the Itanium battle -- and HP wants $4 billion in damages. Oracle started that fight, not HP, though you do have to wonder if it would have happened had HP not parted ways with Mark Hurd.

Even if HP "wins" its suit against Oracle it may end up losing. Itanium, like Autonomy, feels like damaged goods. It takes a long time to get over controversies like these and think of vendors and their products only on their technology merits. That's the kind of clarity HP and HP customers need, but it seems like the distractions never end.

HP has made so many mistakes since Hewlett and Packard passed away, that it's amazing they're still around.

It seems that every CEO has made some major error in judgement. My biggest bone is with Hurd. He's not given enough credit for damaging HP. He crippled Hp's R&D, an area in which HP was famous. His constant concern with cutting costs cost him a great deal of good will in the company. By the time they got rid of him, in a lucky break, because of the scandal, serious damage had been done. He seemed to be more interested in quarterly profits in an attempt to increase his own take home, than the long term health of the company. How often do we see that? All too often.

I had that follow-up call with the HP CRM executive today. It's all around HP's services business, which is doing plenty with CRM deployments (Microsoft Dynamics-mostly-as well as some SAP, Oracle CRM On-Demand, and Salesforce.com) both on-premises, hosted on HP's cloud and SaaS services integrated with on-premises assets and HP-hosted and/or outsourced call centers. They're doing a lot with big data social analysis, including sentiment-analysis, brand-reputation management/defense, moving social service issues to private support interactions, and sales and service interactions. This is an example of what HP's headlines need to be all about if it is to get back to business as usual.

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